Seeking Advice On Starting/Running A Business and EntrePass

[Leix]

Hello Ladies and Gents,

I've been lurking around here for the past few days and have been getting some useful information about the whole ordeal of starting a business in Singapore (also a few l-o-l moments). Alas, I finally decided to create an account and type out my story so that I may get some feedback and insights.



So here it is. First, my background.

I have been living in Singapore since 1998 as a foreign student and I completed the primary, secondary and polytechnic level education here. Not satisfied about the skill set that I had, I moved to San Francisco to get a degree.

Now that I am a fresh college graduate, I have returned to Singapore with hopes of opening a computer graphics business. After two weeks of researching immigration laws, drafting a business plan and having much doubt about everything, I realized that I am quite clueless about running a business.

Obviously, this is because I have zero work experience and zero business track record. One thing I am sure of is that I want to start a computer graphics business. Hopefully a profitable one. Preferably here.

Here comes the problem (ironically, also the solution); EntrePass.

It seems like the whole scheme is designed for big enterprise with existing base somewhere. While I have checked out every box on their requirement list for a new pass, It feels like I'm not doing the right thing as this pass is clearly not designed for small scale start-up. Question number one, will they even approve a business plan written by somebody with zero work experience? (note: it is a proven market)

Now, thinking ahead. Even if the pass gets approved, I will have to spend at least $100k on the first year alone just to qualify for the first renewal. This is a very daunting idea as I am not really sure how fast the business can grow. Even if I am breaking even with the initial $50k, I will be forced to close shop because I didn't expand fast enough. Then there is the second renewal which gives me nightmares.

I read stories upon stories about how businesses don't usually see a profit within their first few years of operation. This is quite hard to justify if you are leaking $100k annually.

So there we are. Being a digital media, I realize that I can start this business anywhere in the world. My home country or any places with more relaxed laws. But I grew up here and would prefer it if I can build a career here.

Question number two, Am I crazy and should I just drop the whole EntrePass ordeal and start a career in my home country where I'm not faced with immigration roadblocks on top of all the other business related pressure.


TLDR Version
Is EntrePass worth the troubles for a small scale start-up?


Thanks for reading!


oh PS: If someone has the time, a summary of what will be required of me when running a Pte Ltd would be nice. I have scrounged MoM and ICA website. ARCA is next on the list of my reading material.

[taxico]

sidebar: having spent so many years studying in singapore, were you ever offered SPR?

[Strong Eagle]

As a person who set up a business under the old Entrepass rules and ran it for eight years, I offer the following.

a) If you are clueless about running a business, you are already in trouble. At the very least, you need to have an understanding of financial statements, regulatory reporting requirements, and the processes and forms necessary to make your business go... invoices, expense forms, order forms, employee data forms and so on.

b) You say you have zero work experience. This is a problem from at least a couple of perspectives. First, even with putting up the necessary $50K, MOM may not grant you an Entrepass because it is supposed to be reserved for business people. Second, and most crucial, where is your business going to come from? A key component of any business is a marketing and sales plan. Singapore is a tightly networked environment. Local companies won't want to hire you as a foreigner. It will be very tough to break into government agencies and MNC's without having a network that can make introductions. And remember, that as big companies continue to globalize, decisions are made out of headquarters that affect world operations.

c) The computer graphics business in Singapore is in trouble. Are you planning on being in the design end of things? Then you will be competing against well known firms, and as they say, no one ever got fired for buying IBM. Small shops are hurting all over the place. Big shops aren't farming out the work to small shops, it is all done in house. And if you are talking about production, all of that is rapidly moving to China and Vietnam. And finally, graphics is a lot like software... you get a client who keeps wanting to make more changes and additions, all on the same original nickel. Do you have the balls to say "no"?

My view is that even if you were approved for an Entrepass, you would be undertaking a very high risk venture, without any clear goals for the rewards you might reap. Just as an example, what is your projected level of income in year 3 in your pro forma financial statements? How many customers will it take to meet this income level, and what is your expected revenue from each customer? Have you verified that your customer base actually exists in Singapore to meet your pro forma goals?

I can tell you that if you have not made a five year marketing/sales plan and a five year set of financial projections, you are already doomed. You must know what revenues you will need to have to make enough profit to support yourself. And you must be confident that your projections are realistic and can be met.

You say that "computer graphics" is a "proven market". Maybe if you are the thinker, the designer, the creator, this statement might be true, IF you've got the marketing network in place to get your message out. If you're talking about production, try typing in "computer graphics" at eLance.com... you'll get more than 27,000 entries.

My view is that you should start up a business in the USA where the roadblocks are few and your costs minimal. If it works, then you could look to spreading to Asia.

[Leix]

Ouch, This is depressing. I'm not sure how to carry the conversation from here. I suppose a defensive statement. I do apologize.

I really want to get this going and I guess what I was looking for is a reassuring pat on the back from somebody experienced like yourself. A false hope? hmm. I suppose the cold truth is better and I appreciate it.

Having no experience about the bureaucracy of running a company is probably my biggest flaw here. It seems like there are a lot more forms than I originally thought. But is it not possible to learn this on the go? Surely there is a list of forms somewhere that are required and some set of instructions on how to fill it out.

My plan is to enter the architectural visualization market in Singapore (hush hush). It is not a very big market, but there are not very much companies providing these services locally either. Plus, I think there are some room for improvements.

Not getting clients is a scary thought that have crossed my mind countless times. My naive thoughts about this is that If I can provide a better product for a competitive cost, they would simply come. Of course this is a technical challenge and one that I would love to take on. How to produce a better product. This is practically the point that I am banking on.

Plus, are people that prejudiced that they would research on who is running a company to check their nationality and only make deals with locals. Anyway, I am practically local. I speak fluent "Singlish". My close friends are locals. I plan to recruit the local talents as well who, coincidentally, are my friends (which could be a bad idea). The only thing not local about me are on paper.

My only strategy here is to provide a better product at a competitive price and cold calling MNCs in hopes that they will give me a chance. Is this a realistic plan or an "inside guy" is always needed?

All you said about computer graphics is spot on. They are moving to cheaper labour countries and places with subsidies (Singapore!). The part about nitpicking the product under the same nickel made me laughed out. Heheh. I am aware of all these problems and having the balls to say no will probably lose you clients. I think there are no way around this and it all boils down on your pipeline and how well and cheaply can you reiterate your product without making a loss. This is a bad business model but one has to adapt. Unless a trade union is formed?

Yeah, The EntrePass does look like it is meant for business people that plan to raise funds through VCs and hire a load of local talents. There is even a page dedicated to filling out your business track record. Urgh. I hope they are more lenient on this.

Again, not coming from a business background, I fail to see the point of a financial projection. However, I do have one drawn out and that exercise just proves to be futile. Every number that I put down are purely speculative. I am probably just ignorant on this subject. Perhaps you can enlighten me on how this is important.

The idea and assumptions about the venture that I have in my head is this;

1) There is a market for ArchViz locally.
2) There is not very many companies that provides this service (locally). In fact, they are going to China for cheaper production.
3) There is room for improvements on the service provided (regionally). It is still far from what European and American companies are providing.
4) If I can bridge that gap in quality locally, the market will respond well.
5) The fundamentals of creating ArchViz is the same as any other CGI. An expansion into broadcast media is totally plausible.

Am I totally off the ballpark here?

In essense,

I am betting on myself to be able to gather and lead a team to produce a better product to enter an existing market. Bureaucracy is my biggest enemy.

@taxico
It wouldn't have mattered. I left the country for three years and any PR status I cloud have gotten will be nullified. No use beating on the past, as the people say, "the rice has turn to porridge" or something.

Anyway, the US is even worse as AFAIK, they don't have any scheme that looks like the "EntrePass" at all. I recently read that some congressman is drafting a bill to introduce something of this nature though. Won't be done in 2-3 years time.

[Strong Eagle]

Ouch, This is depressing. I'm not sure how to carry the conversation from here. I suppose a defensive statement. I do apologize.

I really want to get this going and I guess what I was looking for is a reassuring pat on the back from somebody experienced like yourself. A false hope? hmm. I suppose the cold truth is better and I appreciate it.

Hey!... being depressed now is a lot better than being depressed later after burning through a ton of cash. And, you are asking questions now, which is a good way to start to get enough information to make a rational decision.

Having no experience about the bureaucracy of running a company is probably my biggest flaw here. It seems like there are a lot more forms than I originally thought. But is it not possible to learn this on the go? Surely there is a list of forms somewhere that are required and some set of instructions on how to fill it out.

You should definitely become familiar with all the nuts and bolts of running a business before proceeding. There is a wealth of information available. But, that's not your biggest "flaw". It's that you don't understand the business that you think you want to get into.

My plan is to enter the architectural visualization market in Singapore (hush hush). It is not a very big market, but there are not very much companies providing these services locally either. Plus, I think there are some room for improvements.

I don't know about this specialty... and... I offer two items for consideration. First, I have a friend in the 3D animated graphics business... he also does other types of graphics work as well. He has seen his business shrink year after year as the industry consolidates. Further, he notes that for most business verticals, good graphics is a hard sell... unlike the USA and EU most local companies are decades behind in advertising and marketing.

Second, there are a ton of real estate ads for new properties... heaps of them. To me, this means there is already a well connected advertising, brand development, and graphics support industry in place to support all the new real estate projects. Now, you probably know a lot more about the discipline than I do, and it would be wise to verify that your niche actually has a chance.

Not getting clients is a scary thought that have crossed my mind countless times. My naive thoughts about this is that If I can provide a better product for a competitive cost, they would simply come. Of course this is a technical challenge and one that I would love to take on. How to produce a better product. This is practically the point that I am banking on.

Unfortunately, simply building a better mousetrap isn't going to have people flocking to your door. Putting up high quality and cheap prices is not going to create the draw you hope. The fact is that professional services are sold on a relationship basis. You will have to displace someone else who has had a working relationship with the client you want to win. I would have never started my business except for the fact that my business partner had an extensive address book of contacts in our industry, which gave us people to visit, as well as generating referral business. So... are you ready to develop a marketing plan, and are you ready to get out and sell?

Plus, are people that prejudiced that they would research on who is running a company to check their nationality and only make deals with locals. Anyway, I am practically local. I speak fluent "Singlish". My close friends are locals. I plan to recruit the local talents as well who, coincidentally, are my friends (which could be a bad idea). The only thing not local about me are on paper.

My only strategy here is to provide a better product at a competitive price and cold calling MNCs in hopes that they will give me a chance. Is this a realistic plan or an "inside guy" is always needed?

It's not about your nationality, it's about your connections into the business community. You are an outsider. Chinese people are very conservative in their social and business networks. There needs to be a very good reason to let you into the network instead of choosing someone that is already there.

Add to this the fact that many businesses have ownership interests by various government entities... Temasek Holdings comes to mind. It is nearly always in the interests on one Temasek owned business to engage another... there are lots of politics and inter-relationships that you will be far away from.

As for MNC's, consider this: As companies globalize their processes, they consolidate. So, while company A might have its accounting and supply chain functions for Asia in Singapore, it's PR and advertising might be in Europe... or maybe Hong Kong.

I'm not saying that you can't make this work. I am saying you better full well understand who it is you are marketing to, how you are going to make your pitch, and how you are going to make your initial contacts.

All you said about computer graphics is spot on. They are moving to cheaper labour countries and places with subsidies (Singapore!). The part about nitpicking the product under the same nickel made me laughed out. Heheh. I am aware of all these problems and having the balls to say no will probably lose you clients. I think there are no way around this and it all boils down on your pipeline and how well and cheaply can you reiterate your product without making a loss. This is a bad business model but one has to adapt. Unless a trade union is formed?

Toothless unions in Singapore. Things are going to get worse. With the clamp down on "foreign talent" work passes, two things are happening. Small businesses are being denied the talents they need to provide support functions for MNC's. And second, with the attempt to drive up salaries for Singaporeans, lots of companies see the handwriting on the wall and are looking for other locations.

Yeah, The EntrePass does look like it is meant for business people that plan to raise funds through VCs and hire a load of local talents. There is even a page dedicated to filling out your business track record. Urgh. I hope they are more lenient on this.

Although Singapore constantly talks about moving up the production chain... from actual production to design and implementation, it seems clear that the Entrepass people didn't get this message. The rules are clearly oriented towards manufacturers, with the expectation that there will be factory space and hired workers to produce a product that is probably going to be exported.

No, if you were going to do this, you would most likely have to form a private limited and then apply for an EP via this company. This is how most service professionals have done it. The catch here, though, is that most of them are experienced and can demonstrate a thriving business that is being moved to Singapore, some on the ground contracts, or at least the potential to generate business. It will be hard for you to demonstrate such things.

Again, not coming from a business background, I fail to see the point of a financial projection. However, I do have one drawn out and that exercise just proves to be futile. Every number that I put down are purely speculative. I am probably just ignorant on this subject. Perhaps you can enlighten me on how this is important.

I cannot overly stress the absolute importance of having a detailed business plan which includes pro forma financial statements, that is, your projections for the future. You will royally f*ck yourself and almost guarantee your failure without one. See my link at http://www.herberts.org/miscdocs/Sample ... ntents.pdf for an outline of the business plan I used to get my Entrepass.

If your exercise "proves to be futile" then that is a red flag that you do not understand your business. Let's look at this from a couple of perspectives.

a) What are your start up costs going to be? These include your office, equipment, fees, printing. Also include local talent that you will be hiring. You need to also include your own cash needs to support yourself until your company is profitable. Let's say that you have a company cash burn of $5000 per month and you need $5000 per month to survive (which is barely enough, BTW). You expect break even to occur 8 months out. Therefore, you need $80,000, at a bare minimum, just to ensure you can keep the operation going to break even.

b) What does your monthly net corporate income need to be in order for you to support yourself? Let's say it's $5000. What kind of revenues do you need to get a net income of $5000? That depends on your profit margins. What are your planned charges going to be? You want to be cheaper. So, if you are cheaper, than your margins are going to be low. Let's say you hit 20 percent EBITA. In order to earn $5000 on a 20 percent return, you need to gross $25,000 per month.

c) How will you go about selling $25,000 per month? What will your ramp up look like to get to this point? $1,000 the first month, $5000 the second month, etc? What will your average project produce in gross revenues? How long will the project last? How many projects need to be running simultaneously in order to meet your revenue projections? How many sales prospects actually will turn into clients? How many sales leads do you need to have in the pipeline to get enough clients? How much repeat business will you get? So maybe, you figure a project will average $5000. Therefore you need 5 clients per month. You figure you close 1 prospect in 5. Therefore you need 25 prospects to contact per month.

d) Now, it's time to do the market analysis. 25 clients a month is 300 per year. Where will you source 300 per year. How will you contact them? How will you induce them to buy from you. What is your market competition like. What are the factors that could blow up in your face and make your assumptions worthless?

I'll say it again... if you cannot provide reasonable answers to these questions, then you are going to royally f*ck yourself because you are flying completely blind. Maybe you don't like my percentages, or amounts you need to survive. Fine... put YOUR numbers in place and see what your business needs to do. Not being realistic about the financials is a chief reason new businesses fail.

The idea and assumptions about the venture that I have in my head is this;

1) There is a market for ArchViz locally.
2) There is not very many companies that provides this service (locally). In fact, they are going to China for cheaper production.
3) There is room for improvements on the service provided (regionally). It is still far from what European and American companies are providing.
4) If I can bridge that gap in quality locally, the market will respond well.
5) The fundamentals of creating ArchViz is the same as any other CGI. An expansion into broadcast media is totally plausible.

Am I totally off the ballpark here?

1) No have no idea whether your assumption is correct. What market research will you perform to verify this assumption... because.... it's a big one.

2) What makes you think that? And while I'm at it, you want to provide cheap service. How will you compete with vendors out of China?

3) 4) Maybe there is room for improvement but what is YOUR value proposition? Your not selling a commodity product where a market can "respond" to advertising and word of mouth, you're selling a professional service that is almost always referral and cold calls.

5) Sure, anything is possible, but if you don't have the financials to prove that the idea will work, you're doomed

In essense,

I am betting on myself to be able to gather and lead a team to produce a better product to enter an existing market. Bureaucracy is my biggest enemy.

Business is not about enemies. Business is about identifying a market niche and supplying goods or services to fill that need, AT A PROFIT.

Therefore, you have to identify what the need is, who needs it, and how much you need to charge to be profitable.

Your biggest enemy is you (and I mean this generically for all people considering a business venture) because you will be overly optimistic about how much you can sell, and will fail to adequately prepare financial statements to see if your ideas will work.

You've just gotten some excellent advice on what you need to look at to start a business. Your next steps should be to hit the web and become familiar with business plans and financial statements. After that, you need to do your research about your assumptions about your market, your product, and your competition.

@taxico
It wouldn't have mattered. I left the country for three years and any PR status I cloud have gotten will be nullified. No use beating on the past, as the people say, "the rice has turn to porridge" or something.

Anyway, the US is even worse as AFAIK, they don't have any scheme that looks like the "EntrePass" at all. I recently read that some congressman is drafting a bill to introduce something of this nature though. Won't be done in 2-3 years time.

[Leix]

A lot of harsh truth to take in here.

Thanks for the time, Strong Eagle!

[beanman2112]

Singapore company laws allow a foreigner to own 100% of a Singapore company. Therefore from a company ownership point of view, you do not require a local partner. However, every Singapore company is required to have at least one local director.

[Strong Eagle]

Singapore company laws allow a foreigner to own 100% of a Singapore company. Therefore from a company ownership point of view, you do not require a local partner. However, every Singapore company is required to have at least one local director.

Since when is 'newyork,usa' smack dab in the middle of India?

You have just lit up my spidey sensors.

[Leix]

Well, it's been a couple of months and I'm glad to report that I've just received my Entrepass card. So I thought I should chip in my two cents worth of experience for future applicants. So, in chronological order;

May 2013 - Submitted my Entrepass application to Singapore Post.
The lady assisting me was quite unsure of the process and I had to look at her screen to help her with the submission. So be sure to know the ins and outs of Entrepass. In the package that I submitted are the 10 paged proposal, Entrepass form, my educational certificates along with any educational achievements that I had, and, of course, my passport and all sort of identification cards. I basically sent in everything I had that would put a shine on my application. There seems to be no such thing as too much here.

July 2013 - Approved In Principal - This is where you have to be on the ball.
This part of the process is quite hectic. First of all, this letter only last 1 month and you have to complete a series of tasks to move on. However, the timer start ticking when they sent out the letter. So you really have less then one month depending on the efficiency of your local post man. Be sure to check your mailbox twice a day!

My mistake here: The entrepass application comes with an online tracker. However, they DO NOT update this tracker so don't make the mistake I did. I travelled out of the country to visit some relatives whilst checking this tracker twice a day. Not knowing that the AIP letter had been sitting in my mailbox for two weeks. So really, I only had two weeks left to do the tasks.

Now, the tasks. Basically you have to incorporate your company (register the name and address with the local authorities: ACRA). Once the company is registered, you can open a corporate bank account for your company. I chose OCBC. They have the lowest requirements and have pretty quick turn-around.

Another mistake I made: I thought I can do all this on my own. Basically, to register a company with ACRA, you need a Singpass account. I spend a day or two trying to get one. You CANNOT get a Singpass before you have a valid EP. I tried getting one with my LTVP, it doesn't work. In short, be prepared to spend some money for professional help to register your company. I got company x* to help me with this. *not sure if I can put their name here*

This proved to be the best way forward as they can also help with opening your bank account (they got OCBC guy to come to you). Also, a company in Singapore requires a secretary that knows the laws and obligations of a company. X's services includes said secretary on an annual contract.

Note that your company's start-up capital has got to be at least $50000 unless otherwise stated on your AIP letter. So get the funds ready. In my case, I had to transfer $50k to company x's bank account and they will move it into your corporate account as as soon as it is up. I was a bit wary at first about moving such a large sum into their bank but everything turned out fine. It seems that they will get in trouble if you cannot cough up $50,000 after the incorporation.

After the incorporation, opening a corporate bank account and depositing $50,000 into it, you are ready to talk to MoM again! This time, through their online portal.

Basically, you upload soft copies of your documents into their portal. What they want are a copy of your Bizfile, A bank statement showing the $50,000 in the corporate account and a copy of your AIP letter. Note that since your bank account is newly created, they cannot issue a bank statement showing your balance. All I can get out of OCBC are a print of my end of day balance on rough paper (this paper is really rough, half a piece of A4 paper). Again, this was worrying. I asked it to be printed at least on a paper with their letterhead and they refused. We settled on an OCBC stamp with the tellers signature on it. I ended up submitting this along with the receipt i got from Company X, showing that they have moved $50,000 into your corporate account.

Now you have to wait again.

August 2013 - In Principal approval. - You are set.
Once this letter is in, you can pretty much commence work. However, this letter only last half a year. To make things official, there is one last step that you have to do. Provide a $3000 banker's guarantee (I'm guessing they will use this money to deport you if necessary) and to get your finger prints recorded in MoM. Before you can do that though, there is another hurdle.

To set up an appointment with MoM for this last formality, you need to use the EP online portal. To log-in to this portal, you need a Singpass. Again, there is no way to get a Singpass before you have your Entrepass. Again, you cannot get through this step alone.

By this time, I already employed a local and he does have a Singpass. Note that you have six months on this letter so take your time. Basically, you have to get on the EP portal with his Singpass and register him as your company's reprisentative. Wait a day or two for a letter from MoM with a passkey in it to verify this request and key it in to the system. (Think of an email verification when you register for an account. Except, they are doing it by mail. Rightly so, because this is an important account).

With an EP online account, now you can go ahead and issue yourself the Entrepass and make an appointment with MoM for finger printing.

BUT BEFORE THAT!

The matter of banker's guarantee. Now I tried three banks, OCBC, UOB and Citibank. They all seem to not know how to furnish this thing for MoM. There seem to be lack of documentation on their website regarding this as well.

Basically, the banks require you to come up with the documents so that they can just re-type it word for word. So, where do you find this document? It's not online! I contacted MoM and they said they can fax it over. No, they do not email nor is it anywhere online. You need a fax machine. I don't have one.

Luckily, I was in OCBC when I made the call. I asked the bank's manager for permission to fax the documents over and she said okay. So I gave MoM their fax number and everything went smoothly.

What is a banker's guarantee? Well, basically it's a time deposit with the bank. OCBC's minimum for a time deposit is $5000, so prepare that money as well. Note that they are still your money. MoM just has the rights to take $3000 out of it if needed. After setting up this time deposit, putting in $5000 in it and calling MoM to fax the paperwork over, the bank will ask you to wait a week for them to process it. After that, they will mail the banker's guarantee over to you. This will come with a reference number that you will have to key into EP online to issue the card and make that aforementioned appointment.

IMPORTANT NOTE: Your Entrepass will last a year STARTING from the day of your appointment with MoM OR until your banker's guarantee ends. So when requesting for the banker's guarantee, be sure to put the validity date to be one YEAR after your appointment date. Of course, there is no way of knowing when your appointment date will be before having the bankers guarantee. So you can play it safe and make the validity last 13 months from the day of the request. I made a mistake here and lost four days from the one year validity :[.

Of course, things are more stringent now more than ever. Check into MoM's website for the additional requirements for Entrepass.

[sundaymorningstaple]

Thank you Leix for the in depth, blow by blow, description. Lot's of good pointers there for anybody attempting the Entrepass, and the speedbumps to look out for. Now you just have to wait for all the posters to start asking you "exactly, word for word" what you put in your business proposal, etc, etc, .

[Leix]

NP! Just returning the favor. I got loads of info from this place.
Now onward to actually running a business.

I got so many questions about accounting, taxes and of course, PIC scheme ! Probably in a new thread.

[JR8]

Nice one Leix (and well done), that's 'giving back', in spades...

[Strong Eagle]

Thanks for the good information, Leix. And congrats and best wishes on taking the plunge.

Please do stay with the board and let us know from time to time how things are going.

Cheers.

[AngMoG]

Leix,

great to come back with some info. From personal experience, I would have strongly recommended to work in a company for a while first, as a rank-and-file worker, to know how a company should/should not run, viewed from the bottom. But I know some people cannot wait, and that is a good thing for innovation at least

I am saying this because I had a previous bad experience with a company, as it became clear that the CEO/owner had never worked as an employee anywhere, by the way he was treating his employees and running his business. One of the things I learned from there is that it is more important for people to furnish results than to be present in the office. (He enforced a strict 9-6 have-to-be-in-the-office-or-else policy.)

One nugget of wisdom I got recently from a conference encompasses this: Be the manager you wish you had.

[Leix]

Ah yes. Time to crack the ol whip. jk.
I actually hate being bossy, feels weird. But sometimes I gotta do the dirty deed when people are just under performing. Ugh.

Anyway, Thanks for the kind words.